$2 Trillion+ in New Taxes for Single Payer, or $50 Billion to Strengthen ObamaCare? Next Question, Please

It is not wise for Democrats to spend all their energy
debating Single Payer health care solutions.

None of their single player
plans has much chance to pass in 2020, especially under the limited
reconciliation process. In the words of Ezra Klein, “If Democrats don’t have a
plan for the filibuster, they don’t really have a plan for ambitious health
care reform.”

Yet while we debate Single Payer – or, even if it somehow
passed, wait for it to be installed — millions of persons are still hurting
under our current system.

We can help these people now!

Here are six practical programs to create a better ACA.

Taken all together they should not cost more than $50
billion a year. This is a tiny fraction of the new taxes that would be needed
for full single payer. This is at least negotiable, especially if Democrats can
take the White House and the Senate.

Program No. 1 – Kill the Subsidy Cliff

If your annual income as a single taxpayer is under $48,560,
you currently get a subsidy when purchasing a qualified plan. At age 60, your
subsidy could be as much as $7,000 a year depending on the state. You would be
paying $400 a month for a policy whose full price is $1,024 a month,

But if your annual income is $ 49,000 or more, you get no subsidy whatsoever.

Your premium is the full $1,024 a month –which amounts to
about 30% of your aftertax income, and for what? For a policy with deductibles
and copays that could easily create a $6,000 debt after hospitalization? One
might be better off to stay uninsured, save the $12,000 in premiums, and just
beg the hospital for discounts if you become seriously ill.

The solution is to guarantee that no one, of any income,
has to pay more than 9.5 of their income for insurance. The person earning $49,000
would get virtually the same subsidy as the person earning $1.000 less.

This could impact 2
to 3 million persons, many of them over age 50. Right now they are either
getting crushed by unsubsidized premiums, or staying uninsured, or buying risky
short term coverage.

The annual cost of these greater subsidies should be in the range of $8-$15 billion a year. This is equivalent to about one week of Medicare spending.

Worth noting:

These individual market participants are virtually the
only Americans who do NOT get a subsidy for health insurance. The old get
subsidies, the poor get subsidies, veterans get subsidies, children get
subsidies, and most employees get subsidies.
Many of these subsidies equal or exceed the $7,000 in our example here.

Program No. 2 – Kill the Family Glitch

More and more employers no longer pay for full family
coverage. They only subsidize the
premium of the employee. They charge extra (and often a lot extra) to add a
spouse and children.

If the employee’s spouse has a good job of their own, this
may be acceptable to all.

However — if the spouse is a homemaker, or only has part
time work, this can be a huge problem. It may cost $1,000 a month or more to
add a spouse and children to a corporate plan.

Due to the ‘family glitch” in the ACA, families are not
eligible for premium subsidies in the exchange if the employee
could get employer-sponsored coverage just
for him or herself, for less than 9.86 percent of the household’s
income

It doesn’t matter how much the employee would have to pay
to purchase family
coverage. The family members are not eligible for exchange subsidies

The dependents can either pay full price in the individual
market, or pay whatever the employer requires to cover the family on the
employer’s plan, despite both options being financially unrealistic.

A spouse with children and a modest family income should
get that ACA subsidy.

Somewhere between three to six million people are impacted by the family
glitch. They are disproportionately middle income, because higher-income
workers are more likely to work for companies that heavily subsidize coverage
for dependents.

The cost of new
subsidies could be $20 billion a year.
But note the following:

As recently as the 1950’s, we actually wantedone
parent to stay home with young children. If we
really believe in family values, we can show it by spending actual
public money on families. In Europe, children’s health insurance is basically
free; an expanded ACA is the least we can do.

Program No. 3 – Improve the ACA policies

We must address the high deductibles and out-of-pocket
limits now found in most ACA insurance contracts.

Here are several reforms we can impose immediately:

A. Emergency care must be exempt from the deductible.
(Co-pays up to $250 are acceptable. Co-insurance for emergency care is not
acceptable.)

B. Drugs must have their own deductible, versus the
overall plan deductible. In other words, drug coverage must start after perhaps
$250 in drug expenses, and not wait
until the full plan deductible is met.

Here too, co-pays are acceptable but co-insurance is not.

If a person’s drugs cost $10,000 a month and their
co-insurance is 20%, that is not acceptable.

(An appalling 40% of current ACA plans do not have
separate drug deductibles.)

C. Out of pocket maximums must be related to family
incomes. A family maximum of $14,300 is much too high for a $50,000 annual
household income. Their maximum should be no more than $5,000.

D, Out of network care must count toward out of pocket
maximums. The plan deductible must also count against out of pocket maximums.

All these steps will reduce the chance that a person with
insurance will go deeply into debt.

Granted, such
provisions will raise insurance premiums by about 10%. However, if premiums go
up, subsidies go up. If subsidies are
universal at all income levels, no one is worse off. The higher subsidies should result in $7 to $10 billion of extra
federal spending.

This is the most equitable way to improve the quality of
health coverage. We cannot wait for better insurance plans to arise from free
enterprise or competition. The only time
that insurance companies ever created attractive policies was when they
could impose strict medical underwriting.

(Whereas European nations have had low-deductible,
no-exclusions health insurance for
decades – primarily by using price
controls and mandates. )

3. Wipe out patient liability if a claim is denied (see Program
No. 4 , above)

4. Let the uninsured pay
Medicare rates for hospital care,
They might still have medical debt, but much less of it . Chargemaster
billing would be outlawed.

5. All debts in excess of 20 per cent of household income
should be forgiven. The federal
government could pay hospitals perhaps twenty cents on the dollar for their
largest patient debts. Bills will be recalculated based on the Medicare rate at
the time.

6. All debts over seven years old should be forgiven. (and
never, ever, sold to collection agencies)

7. Surprise medical bills must be forgiven.

8. In case of emergencies, no balance bills are allowed.
What the insurance company pays is all the hospital and the doctors will get…..
basically this is “mandatory assignment”.

9. No lawsuits, liens, or attorney collection fees can be
permitted. The state should not be complicit in immiserating its own citizens.

Program No. 6 – Enforce Consumer Laws That Already Exist

1.
Out-of-network medical bills are already illegal…..

Insurers sell policies by claiming that certain hospitals
are in their network. Hospitals then boost their admissions by convincing
patients they are in the insurer’s network. Hoewever, when the unwary patient
gets surprised at billing time, it turns out these claims weren’t exactly true.

This is fraud; the Federal Trade Commission could punish these offenses right now.

2. Chargemaster bills to emergency patients are
already illegal..

When an actual contract cannot be formed – as in medical
emergencies – the courts have a long history of constructive intervention. The
doctrine of quasi-contract would limit
charges to the amounts that are actually and customarily paid to and accetpted
by hospitals.

Courts can force
hospitals to accept an average market price right now, versus the dishonest and
opportunistic chargemaster rates,

3. Predatory
pricing for drugs could already be
subject to antitrust enforcement

The antitrust laws are directed against the harmful conduct that
extracts money from consumers, and gives it to producers for no other
reason than they are in a position to take it.

In hesitating to use antitrust against
excessive pricing drugs, the United States is an international outlier.
Governments outside the United States are using theirr antitrust laws to rein
in excessive drug pricing as an abuse of dominance. Even a conservative
position on antitrust would allow for any legal actions against drug companies.

SUMMARY

We will not achieve a more equitable health system
without new laws and federal action.

Also you see
conservatives advocating for Singapore’s health care system without
any real understanding of it. Singapore’s system has massive subsidies for
nursing homes, rehabilitation care, and home-based care. It requires mandatory
savings – 36% of wages spread over various accounts. The government also
provides a basic level of care that’s heavily, heavily subsidized. And here’s
the kicker – it relies on tons of government intervention in the market to keep
costs down. They use centrally planned and fixed budgets, they control the
acquisition of new technology, they regulate the number of students and
physicians, they use purchasing power to buy drugs more cheaply, and they have
an employer mandate for foreign workers.”

Eventually we may get it into our thick American skulls
that ‘forced savings’ and mandatory insurance are good things. Derek Thompson
commented on pensions and health care in
The Atlantic,,,,,

“In a world obsessed with the wizardry of behavioral nudges, perhaps policymakers should consider putting away the magic wand and just do the paternalistic thing: Force people to save more, by expanding Social Security or by creating new forced savings policies. It should be harder for Americans to not have financial security when they retire. Indeed, the countries that finish above the U.S. in retirement security, like Switzerland and Norway, not only have much higher taxes but also benefit from the availability of public-health options and cheaper education in their prime-age years, which means they don’t have to spend as much out of pocket on insurance and college. In Germany, social-insurance programs provide for medical care and an even more substantial level of retirement pension. It sounds counterintuitive and nearly paradoxical, but maybe the only way to make Americans richer in the long run is to take more money away from them.”

Bob Hertz is a retired insurance broker. He learned about health care from Uwe Reinhardt, Joseph White, Dr. Robert Evans, and George Halvorson a fellow Minnesotan.

Post navigation

This is an excellent essay. Even though the ACA became law 10 years ago, we don’t seem to be willing to spend $50 billion a year or so to fix obvious flaws in the system, especially related to the availability of subsidies and finding reasonable remedies to very large surprise bills from out of network doctors and ambulance companies. Yet liberals are trying to convince us to spend will north of $3 trillion per year to enact Medicare for all which would be extraordinarily disruptive and probably cause a host of negative unintended consequences in the process. Let’s just fix the ACA which we know how to do.

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